The Impact of Institutional Structure on the Export ofIntermediate Goods of Developing Countries

In the last two decades, trade in intermediate goods and services in developing  countries has been growing due to their connection to global value chains. On the other hand, many of these countries should take steps to develop institutional structures, especially in the field of international trade. The mail objective of this study is to investigate the importance and impact of the institutional factor on the export of intermediate goods of developing countries within the framework of the gravity model. The average governance index of the World Bank and its determinants include the rule of law, the effectiveness of government, the quality of regulation, political stability and absence of violence, corruption control and Voice and accountability are used as proxies for institutional structure. To estimate the model of panel data for the years 1996–2017, the Estimated Generalized Least Squares (EGLS) and Fully Modified Ordinary Least Squares (FMOLS) methods were applied. The results  show that enhancing the good governance in those countries, increases their  participation in the global export of intermediate goods. However, good governance  in the destination countries does not affect the export of developing countries.  Therefore, the priority of developing countries inenhancing the export of intermediategoods by improving good governance, must be to providing a platform for government effectiveness, quality regulation and the rule of law.